Terra Classic has been doing extensive clean-up work following the Terraport hack which shook the foundation of the ecosystem. This even led to the de-peg of the ecosystem’s stablecoin, USTC, leading to another catalyst for the bears to exploit.
Despite this, Terra Classic is putting in the work to re-anchor USTC to the US dollar.
Recently, a proposal hit the community which could potentially fix the stablecoin situation. Proposal 11487, titled USTC Incremental Repeg, Buybacks, Staking, Swaps, aims to fix the problem through a series of steps that would ensure the stability of the stablecoin.
A Proposal To Fix USTC Fundamentals
According to the Agora post dedicated to the proposal, two systems would be implemented if the proposal was accepted by the community, namely the Divergence Protocol and Protocol Buybacks.
The Divergence protocol aims to work by penalizing sellers that sell the USTC below the current market price. For example, if the seller creates an order to sell USTC at $0.95, he will only get $0.90 in profit as the Divergence fee will be deducted from the transaction.
RedlineDrifter, the mind behind the proposal, also said that the “protocol would be implemented across all USTC trading pairs both on and off-chain but not on regular blockchain transactions.”
This means only trading activity will experience this system and not everyday transactions. The Divergence fee would then be used in the protocol buyback system that would automatically buy back USTC to defend the token’s peg to the US dollar.
Proposal 11487 #USTC Repeg is close to pass.#LUNC #LUNCCcommunity #Crypto pic.twitter.com/dcvtH7bw36 #LUNC
— LUNC (@w4kWpWPuDT6CeKG) April 27, 2023
Terra Classic: How Did The Community React?
The proposal was met with a hugely positive outlook by the community. According to a recent tweet, 41.87% voted yes with 49.05% abstained. Only 9.06% voted against the proposal. In the context of LUNC, the hype surrounding the re-peg proposal has been limited.
According to CoinGecko, the token’s price only increased by nearly 2% in the past 24 hours. The other timeframes also show a strong bearishness still present on the market for LUNC. CoinGlass data also shows that the bulls only have a slight advantage over the bears.
At the time of writing, the proposal seems to be on the path to being accepted. If the proposal ever gets implemented, it could lead to the possible re-pegging of USTC, bolstering investor sentiment after the disastrous Terraport hack.
Proposal #11487 for #USTC Repeg is passing & I’m happy that atleast Validators voted on it to show good gesture.#LUNCcommunity we need help of all CEXs to Repeg $USTC because it’s huge supplies need huge amount to repeg it.
RT & Follow.#LUNC #LUNCBURN #LUNCARMY #LUNA #USTC
— Saqlain Ali (@SaqlainAli888) April 28, 2023
Along with the decision of South Korean authorities to not consider LUNC as a security, this would help the ecosystem by increasing demand for the crypto.
-Featured image from The Daily Hodl